Overview

Property Overview

The Keno Silver Project is a highly-prospective, district scale, brownfields exploration property consisting of 166 square kilometres in the world-class Keno Hill Silver District of Canada’s Yukon Territory, which has produced over 200 million ounces of high-grade silver over the past 100 years at an average grade exceeding 1,300 grams/tonne. The property is adjacent to, and on-trend with, Alexco Resource Corp’s operations, one of the highest-grade primary silver operations in the world with an estimated life of mine production grade of 843g/t Ag and 68 million ounces of contained silver (M&I)1. The area features excellent infrastructure, with well-developed and maintained roads, as well as access to the Yukon power grid which supplies Keno City.

Historic Production

Ag oz/t

Ag g/t

Duncan

744.3

25,455

Vanguard

305.8

10,458

Caribou Hill

177.1

6,057

Silver Basin

167.8

5,739

Formo

148.9

5,092

Cobalt Hill

65

2,223

Metallic Minerals land package covers the eastern portion of the district, along with portions on the western and southern sides, and represents a continuation of the same geological structures and host rock associated with the demonstrated mineralization occurring on Alexco’s ground to the west. The Keno Silver Project was host to eight historic silver mines with some of the highest-grades in the district and five that had average production grades above 5,000g/t (see table above)2. However, the eastern portion of the district has seen little modern exploration due to the longstanding, fragmented, private land ownership structure, which has now been largely consolidated by Metallic Minerals.

Our technical team has reviewed decades of historic and modern geological data in developing priority exploration targets for the 2017 field program which was completed in September 2017 and consisted of:

Continuation of compilation and interpretation of historic exploration data from drilling, trenching, and channel sampling along with existing soil and rock sampling.

Refinement and prioritization of targets using additional geophysical and geochemical surveys, stratigraphic mapping, and trenching.

Drill testing of highest priority targets to test down-dip and along-strike extensions of previously identified mineralization along the known mineralized trends, including at the historic producing mines on the property, and in areas that show significant potential to host Keno type deposits but that may not have seen historic focus due to soil and vegetation cover.

Results from the 2017 exploration program were published in December with highlights in the tables below and locations shown in the associated map.

Diamond Drilling Highlights 2008 - 2017 (Caribou target area)

Hole

From (m)

To (m)

width (m)

Ag g/t

Pb %

Zn %

Au g/t

Ag EQ g/t

08CH001

33.30

35.30

1.15

116.2

0.96

0.18

0.12

180

Including

34.30

34.50

0.2

958

8.44

1.22

0.78

1482

08CH005

35.00

35.50

0.48

1046

3.39

1.44

0.77

1,343

CH11-007

14.60

18.50

3.85

314.8

27.8

0.53

0.17

1,667

Including

14.60

15.80

1.2

94.3

85.56

0.01

0.23

4,146

CH11-008

14.80

17.70

2.88

162.5

3.15

0.58

0.16

355

Including

14.80

15.50

0.7

493

10.49

0.93

0.4

1069

CH11-009

15.50

16.90

1.38

1,696.3

9.42

0.94

0.85

2,257

CH11-010

30.30

31.00

0.63

447

2.34

3.07

0.35

749

CH11-017

22.90

23.40

0.49

1,610.8

16.83

1.16

1.26

2,565

CH11-018

24.10

25.00

0.85

1,151

7.16

1.03

0.05

1,548

CH17-021

39.35

42.0

2.65

407

3.39

6.35

0.834

972

Including

39.35

39.80

0.45

1,607

15.47

1.70

0.759

2,487

CH017-23

40.7

42.3

1.6

1,405

25.98

3.72

0.282

2,851

Including

40.70

41.50

0.80

2,408

47.30

4.69

0.108

4,898

41.50

42.30

0.80

402

4.65

2.74

0.456

804

CH17-026

48.62

50.85

2.23

59.1

0.82

4.99

0.960

440

Including

49.90

50.85

0.95

104

1.55

9.76

1.641

828

2017 Surface Sampling Highlights (Keno Summit Targets)

Sample #

Area

Type

Ag g/t

Pb %

Zn %

Au g/t

Cu %

Ag EQ g/t

1907511

Bounty/Buccaneer

Grab

625

1.22

2.75

0.101

0.24

867

1907512

Bounty/Buccaneer

Grab

2,609

65.48

0.45

0.18

0.05

5,741

1907513

Bounty/Buccaneer

Grab

12,078

71.1

0.99

1.32

1.77

15,795

1907514

Bounty/Buccaneer

Grab

539

2.04

34.86

0.08

0.2

2,533

1907502

Caribou

Grab

6,420

69.77

0.07

0.79

0.14

9,790

1907503

Caribou

Grab

5,275

60.85

0.02

0.42

0.06

8,185

1907504

Caribou

Grab

1,964

59.98

0.12

0.69

0.02

4,854

114169

Caribou

Grab

7,063

73.49

0.2627

0.80

0.55

10,668

1907501

Upper Faith

Grab

3,713

77.23

0.7

0.34

0.27

7,449

1907505

Upper Faith

Grab

5,829

61.84

7.16

1.71

0.23

9,289

1907506

Alice

Grab

1,193

18.22

2.11

0.73

0.05

2,229

1907507

Alice

Grab

4,972

57.56

2.07

1.80

0.18

7,958

1907508

Alice

Grab

3,720

62.73

4.16

1.40

0.13

7,025

1907509

Alice

Grab

4,001

57.48

9.98

1.76

0.20

7,407

1907510

Duncan

Grab

3,927

77.64

0.14

0.46

0.16

7,649

1907521

Silver Basin

Chip

2,956

68.06

0.1957

0.29

0.07

6,206

1907515

Bounty/Rum Tum

Grab

56

0.26

0.38

11.30

0.01

973

113382

Bounty/Rum Tum

Grab

7,668

3.14

9.55

1.59

3.28

8,839

Highlighted Drill Results to Date from Homestake #1 and #2 Vein

Hole

Vein #

From (m)

To (m)

Width (m)

Ag g/t

Pb %

Zn %

Au g/t

Ag Eq g/t

HS17-024

HS2

31.86

33.14

1.28

8

0.11

0.15

2.460

214

Including

32.69

33.14

0.45

16

0.18

0.12

6.600

547

HS17-027

HS1

74.64

75.60

0.96

207

3.62

0.09

0.002

383

Including

74.64

75.13

0.49

364

6.30

0.06

0.004

665

And

76.48

77.50

1.02

569

1.02

0.03

0.010

620

HS10-001

HS2

47.30

50.10

2.80

59

0.81

0.37

2.500

312

Including

48.75

50.10

1.35

71

1.00

0.61

4.840

530

HS10-006

HS2

73.15

74.91

1.76

522

0.47

0.25

0.030

560

Including

73.15

73.37

0.22

4027

1.00

0.65

0.170

4122

HS10-009

HS2

32.38

34.99

2.61

110

0.49

0.06

1.510

253

Including

33.35

34.09

0.74

359

1.00

0.02

4.880

789

08HS004A

HS1

79.80

80.60

0.80

24

1.01

0.74

1.510

229

Including

79.80

80.10

0.30

63

2.67

0.76

3.910

535

08HS009

HS2

40.50

42.70

2.20

37

1.30

0.38

1.150

209

Including

40.50

40.90

0.40

98

4.29

0.83

3.300

603

And

43.70

45.00

1.30

109

4.10

0.04

2.000

461

Including

43.70

44.10

0.40

232

6.43

0.10

1.320

644

Keno Hill Silver District Geology and Deposits

Keno Hill type silver deposits consist of high-grade silver veins typically 1-5 metres in width grading from 200 g/t to >5,000 g/t silver, with associated lead and zinc sulphides. The largest individual deposits in the district, which range from 10 million to 100 million ounces of contained silver2, are associated with northeast trending, southeast dipping fault/vein structures which form major ore shoots in the preferred host rocks: quartzite and greenstone. To date, there are twelve known mineralized trends in the Keno Hill silver district, eight of which continue through the eastern portion of the district, which hosts Metallic Minerals’ Keno Silver Project (see Figure 1 below).

Figure 1 – Keno Hill Silver District Geological Trends and Deposits

Figure 1

The schematic cross sections shown below (Figure 2,3, and 4) show the geology and deposits from 3 of the 12 known mineralized trends in the Keno Hill silver district, ten of which transverse across Metallic Minerals’ Keno Silver Project. Figure 2 highlights the major historic producers as well as recent discoveries along the Bermingham – Calumet Trend and provides evidence of Keno-type mineralization occurring where the above-noted geological conditions are present. The major, new high-grade Bermingham discovery demonstrates the potential for significant new finds along trend and down dip from past producing mines in this prolific, historic district. More information on these areas is available by clicking here .

Lesser explored parts of the district, particularly the eastern portion of the Metallic Minerals ground, have similar geologic settings and also host historic producing mines and mineralized prospects with the potential to host significant new mineral resources.. Figures 3 and 4 depict the continuity of these key structural trends across the eastern portion of the Keno Hill silver district and identify former operations which represent priority exploration targets. Each of these sections includes a detailed description of the associated target areas.

Bermingham – Calumet Trend (Click to enlarge)

Figure 2

Silver Queen - Elsa-Formo Trend (Click to enlarge)

Bellekeno – Keno Summit Trend (click to enlarge)

Figure 3

Bellekeno – Keno Summit Mineralized Trend

Figure 3, looking to the northwest, outlines significant historic production from the Bellekeno and Keno Hill deposits hosted in both Keno Hill Quartzite and Triassic Greenstones, respectively. Mineralization continues at surface along this proven productive trend in similar host settings. Past producing mines on Metallic Minerals’ ground includes the Vanguard, Duncan and Caribou mines which had average grades exceeding 5,000 g/t silver2 and are hosted in Keno Hill Quartzite along with the Gold Hill target. The Avenue and Beauvette targets (discussed below on the Homestake Trend) are hosted in greenstones in similar settings to the Keno Hill 12.6 Moz and Sadie Ladue mines 12.7 Moz, which were two of the largest producers in the district. Key target areas along these trends are described in further detail below from west to east, along with results from 2016 surface sampling, where applicable.

Vanguard Target Area

The Vanguard area was first staked in 1920 and saw production exceeding 8,000 g/t silver2 starting in 1934 with 4 shafts excavated until 1949, with no known subsequent modern exploration. Mineralization at Vanguard is hosted in the Keno Hill quartzite and is thought to be associated with secondary cross structure as is commonly seen in the district.

Gold Hill Target Area

The Gold Hill trench discovery, with grades up to 5,747 g/t silver equivalent (AgEq), is interpreted as a splay off the main Porcupine/Kinman structure which yielded 22,863 tons of historic production from the Comstock Mine, with average production grade of 1,240 g/t silver. The Gold Hill vein structures are thought to be transverse-type veins similar to the style along the Porcupine/Kinman vein structure. Transverse-style veins in the district, like this new vein discovery, are typically very high-grade silver and can support significant ore-shoots.

Assay Results from 2017 Gold Hill Trench GH17-TR-01

Sample#

Trench

Type

From (m)

To (m)

Width (m)

Ag g/t

Pb%

Zn%

Au g/t

Cu%

AgEQ g/t

114209

GH17TR-01

Channel

1

1.3

0.3

504

14.02

0.11

0.01

0.002

1,172

114213

GH17TR-01

Channel

0.6

0.82

0.22

405

14.30

0.19

0.02

0.002

1,091

GH17TR-01

Composite

2.05

3.1

1.05

442

11.95

0.28

0.01

0.006

1,023

114218

incl:

2.05

2.2

0.15

2,509

68.31

0.23

0.06

0.002

5,747

114222

GH17TR-01

Channel

1

1.21

0.21

1,418

44.59

0.07

0.02

0.006

3,526

114225

GH17TR-01

Grab

2,308

66

0.21

0.05

0.009

5,436

114227

GH17TR-01

Channel

1

1.95

0.95

128

3.85

1.68

0.01

0.002

400

114230

GH17TR-01

Channel

1

2.1

1.1

14

0.44

2.26

0.005

0.002

156

The Gold Hill trench was planned to follow up work conducted earlier in the season that identified a Pb-Zn soil anomaly. Upon intersecting the vein with trenching over approximately 8m, the trench was redirected to follow along the trace of the vein resulting in more than 20m of continuous exposure.

Duncan Target Area

The Duncan area had historic production of 11.8 tons grading 25,462 g/t silver and 22.4% lead2. A highly prospective target at the Duncan area exists where the vein, hosted in quartzite, intersects an overlying schist contact. The schists can act as a fluid cap to the vein and ore shoots are known to occur across the district in this setting. The Duncan target is thought to be a continuation of the Porcupine vein system that hosts the Keno Hill and Gold Hill systems. Selective sampling from surface exposures at the Duncan prospect in 2009 returned silver values ranging from 66.9 g/t to 3,964 g/t, including up to 5.13 g/t gold (see Technical Report on the Keno-Lightning Project dated July 31, 2010 available under the Company’s profile at Sedar.com). These samples may not necessarily be representative of all the mineralization hosted in the entire area but are similar to other areas in the district. The historic Duncan mine was the host of the highest-grade production in the Keno Hill silver district with only very limited exploration since.

Caribou Target Area

The Caribou target area includes the Caribou veins and cross-cutting Alice veins. The showing was first discovered in the early 1920’s and opened up by shafts, an adit, prospect cuts and hand trenches. The vein consists of silver rich galena in a gangue of carbonates, oxides and quartz hosted in the Keno Hill Quartzite. About 120 tons of ore form the Caribou adit was shipped between 1925 and 1927 grading more than 6,000 g/t silver2.

In 2008, six shallow diamond drill holes tested the Caribou and Alice vein systems, following trenching and RAB drilling programs. Follow-up drilling in 2011 targeted strike and depth extensions of the Caribou vein system. Eleven of the fourteen holes drilled at Caribou intersected mineralization, and three of the eleven returned results in excess of 1,000 g/t Ag. Results of the program defined 300 m of continuous silver mineralization at >100 g/t between 11m and 35m down-hole that remains open at depth and along trend. The most significant results are highlighted below:

Hole

From

To

Interval (m)

Ag g/t

Au g/t

Pb %

Zn %

Ag Eq. g/t

CH11-07

15.9

17.2

1.3

770

3.40

893

CH11-08

13.4

14.8

1.4

493

10.50

4.93

875

CH11-09

15.5

16.9

1.4

1,696

0.457

9.40

0.94

2,068

CH11-17

22.9

23.4

0.5

1,787

1.394

18.70

1.29

2,610

CH11-18

24.1

25

0.9

1,151

7.20

1.03

1,451

CH11-18

34.7

36.3

1.6

1,183

12.50

0.08

1,638

In the fall of 2016, select grab samples were collected along the Caribou vein. The results of this sampling program show high grades of silver and elevated gold values occur at surface in this area and additional work will focus on refining potential targets for follow-up drilling.

Sample no.

Location

Ag g/t

Au g/t

Pb %

Cu %

Zn %

Ag Eq. g/t

1501201

Caribou Vein

6,284

1.07

57.49

0.23

0.71

8,490

1501202

Caribou Vein

5,015

0.53

71.33

0.12

1.33

7,696

1501205

Caribou Vein

604

0.20

6.69

0.03

2.29

950

1501206

Caribou Vein

640

0.16

0.99

0.08

2.22

780

1501207

Caribou Vein

886

0.27

8.12

0.04

0.62

1,226

1501208

Caribou Vein

1,314

0.26

6.83

0.15

0.44

1,612

1501209

Caribou Vein

8,807

1.58

58.51

0.26

0.04

11,063

Homestake – Keno Summit Trend (click to enlarge)

Figure 4

Two kilometers southeast and parallel to the Bellekeno-Keno Summit trend, the Homestake trend shows several similar features that are recognized between the two distinct mineralized trends, including the continuation of the Keno Hill Quartzites and Triassic Greenstones known to host mineralization across the district. This mineralized trend is primarily controlled by Metallic Minerals and is defined by several highly-prospective areas, namely the Homestake, Divide, Faith, Segworth and Beauvette mineralized showings. Two prominent target areas in the Homestake trend are discussed below. Three additional parallel trends are identified further east of the Homestake trend as defined by the Cobalt, Gram, Gustavus and McMillan showings.

Homestake Target Area

The Homestake targets are vein structures within a broad structural corridor nearly 200 metres wide, with both longitudinal and transverse-style veins. The Homestake #1 vein shows classic Keno style, high-grade silver-lead-zinc mineralization, whereas the #2 vein also shows significantly elevated gold, which is characteristic of some structures in the larger deposits within the Keno Hill silver district. The strongest grades to date include assays of 4,027 g/t silver from drilling and 4,717 g/t silver from trenching on the Homestake #1 vein, and 22.1 g/t gold with 332 g/t silver from trenching on the Homestake #2 vein. The Homestake vein systems are exposed at the surface and are open to further expansion down dip and along trend.

The 2017 objective at the Homestake targets was to drill below, and along trend of, the shallow historic mining and sampling on the structure to determine the potential of the systems to host significant high-grade silver, lead, zinc and gold, and to provide vectors to assist follow-up exploration aimed at pursuing higher-grade material. All six 2017 drill holes intersected the mineralized Homestake structures, with highlight assays for all results to date shown below in Table 1. Offset drilling on the Homestake #1 and #2 vein structures is a key component of the planned 2018 exploration program, particularly down dip and along strike in a broad window of more massive Keno Hill quartzite, one of the preferred host rocks in the district.

The Homestake targets occur along the Homestake trend; one of the 12 known mineralized trends running across the Keno Silver District and traversing Metallic Minerals ground. It is the next major mineralized trend 2 kilometers east of the trend that hosts Alexco Resource Corp’s Bellekeno mine and is similarly underlain by the main Keno Hill quartzite package and locally-intruded by greenstone sills, which are the two key rock units that host most of the production and resources in the district. Originally discovered and worked in the 1920s and 30s, several tons of direct shipping ore were historically mined at the Homestake property. Limited exploration including trenching was completed on the Homestake block during the 1960s and 70s, with some shallow drilling and surface trenching conducted between 2008 and 2011. Both efforts returned significant high-grade results.

Exploration by Metallic Minerals on the Homestake targets in 2017 followed up the historic surface work with detailed stratigraphic mapping, magnetic and VLF geophysical surveys, as well as the extension of soil sample grids over the broad target area. Through this preliminary work, it was recognized that there was potential on the Homestake targets to significantly expand the known strike extent of mineralization by testing the more massive Keno Hill quartzite to the east of the main showings.

Diamond drilling in 2017 focused on testing down dip below the shallow historic sampling and along the structure to determine the potential depth and lateral extension of the open-ended mineralization in the best potential host rocks. Three drill holes successfully tested this concept by stepping out approximately 250 metres from the closest drill intercept of the #1 vein and 600 metres from the main cluster of previous drilling on the #2 vein (See Figure 2 below). The width of the structure in this area was particularly notable, extending over 15 meters in three mineralized structures. It is anticipated that future drilling will follow up the continuation of these holes down dip and along strike to the east as well as test the massive quartzite stratigraphy to the west of the main showing.

Divide and Faith Target Areas

The Divide and Faith target areas show at least four veins and cover the projected southern extensions of the Caribou and Avenue Veins. The presence of multiple veins that intersect each other and are offset by faults, sets up favourable conditions for Keno Hill oreshoots. The Divide and Faith targets have received little modern exploration outside of prospecting and soil sampling and have more cover than other targets areas on the property.

A soil geochemical survey over the area in 2011 returned an 800 x 900 m gold, silver and pathfinder element anomaly. The area is a priority for further soil sampling, detailed geological mapping and trenching.

Avenue and Beauvette Target Areas

Beauvette Hill, the location of the Avenue and Beauvette targets (see Figures 3 and 4), has seen little historic work but is directly on-trend with several productive mineralized structures from the Keno Summit area and appears to be underlain by what may be a significant array of greenstone bodies. In addition to the Keno Hill deposit, the Sadie Ladue mine, which produced 12.7 Moz of silver, is an example of a greenstone hosted deposit in a similar structural setting located on the north side of the Keno Summit area2.

Avenue is an area of quartzite and greenstones that is intermittently exposed over a strike length of 1.2 kilometres which has a coincident lead, zinc and silver soil anomaly in areas typified by shallow cover. The Avenue target is on-trend with several highly-mineralized veins where they continue into what is believed to be an array of significant parallel greenstone bodies, masked under shallow cover.

Surface sampling in 2016 at Beauvette Hill area resulted in the discovery of a new sulphide-rich vein showing at a quartzite and greenstone contact.

Footnotes

1The material scientific and technical information in respect of Alexco’s Keno Hill Silver District Project is based upon information contained in the technical report dated March 28, 2017, entitled “Alexco and Silver Wheaton Amend Silver Purchase Agreement and Alexco Announces Positive Preliminary Economic Assessment for Expanded Silver Production at Keno Hill” which is available under Alexco’s profile on Sedar.com.

Readers are cautioned that there is no certainty that the PEA will be realized and it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources are not mineral reserves and do not have demonstrated economic viability. Additionally, a production decision which is made without a feasibility study of mineral reserves demonstrating economic and technical viability carries additional potential risks which include, but are not limited to, the risk that additional detailed work may be necessary with respect to mine design and mining schedules, metallurgical flow sheets and process plant designs, and the noted inherent risks pertaining to the inclusion of approximately 6% inferred mineral resources in the mine plan.

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